Google Plans Pay-Per-View Films

Google’s YouTube video site is in negotiations with Hollywood’s leading movie studios to launch a global pay-per-view video service by the end of 2010, putting it head-to-head with Apple in the race to dominate the digital distribution of film and television content.

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Google has been pitching to the studios on the international appeal of a streaming, on-demand movie service pegged to the world’s most popular search engine and YouTube, according to several people with knowledge of the situation.

Google will use its search technology and YouTube to direct viewers to the new service, which is likely to launch first in the US, with other countries added over time, the people added.

“Google and YouTube are a global phenomenon with a hell of a lot of eyeballs—more than any cable or satellite service,” said one executive with knowledge of the plans. “They’ve talked about how many people they could steer to this...it’s a huge number.”

Negotiations have been ongoing for several months, but have taken on greater urgency in recent weeks, amid intensifying competition between media and technology companies over the digital delivery of film and TV programming. Apple is this week expected to unveil improvements to its TV device, which connects living-room sets to the internet, and eventually hopes to open the device up to “apps” developers.

The Google project has caused excitement in Hollywood because film studios are searching for new revenues to replace DVD sales, which are in steep decline.

Viewers will stream rather than download the films and pay about $5 for newer titles. The movies would be available at the same time as their release on DVD and on Apple’s iTunes store and Amazon.com , meaning Google could count on recent box-office hits to power the service.

YouTube said it had been beta-testing a film rental service since January.

Google has been searching for a breakthrough with YouTube since acquiring the video site for $1.65bn in 2006.

YouTube attracts millions of users but continues to be best known for its user-generated content. Yet it has struck several content deals and in April launched a free movie service.